Workers Compensation Audits – Five Types For Cost Savings
We often receive questions centering on Workers Compensation audits. Audits – we like to call them reviews are an essential method to cut comp costs.

This term may cover many types of audits or reviews. I thought I would cover the top 5 types performed for employers on a regular basis in order by popularity.
They are:
Premium Audits – this is basically an examination of the mechanics of how your Workers Compensation premiums were calculated by examining your policies, endorsements, yearly premium audits, and other pertinent materials.
E-Mod Audits – this type of audit recreates the mechanics of how your Experience Modification Factor was calculated. This can be very important to employers as the E-Mod has a major impact on premiums.
Claim Audits -a predetermined set of best practices for claims handling are established – usually using the carrier’s or TPA’s claims manual. The Workers Comp claims are reviewed thoroughly to ensure the claims adjusting and supervision staff is performing at an acceptable level. Currently, we use 31 – 33 areas to examine the claims. Trends are analyzed and reported using our copyrighted reporting methods. This is a very critical area for self insureds.

Reserve Audits – can be done during claim audits or standalone. An analysis is performed for over/under reserving of the Workers Comp files. This is especially important for nonself insureds as the E-Mods are calculated directly from the Total Incurred of each file.
Subrogation Audits – money is often left on the table when subrogation has not been addressed in all of the Workers Compensation files. As I wrote in this article, Workers Comp adjusters may not be that heavily trained in liability adjusting. That is the nature of the business. Automobile accidents are a major concern in this area.
There are two caveats to consider in these Workers Compensation audits. Picking out one or two mistakes by an adjuster and inflating their importance is a waste of time and $$$. Trends should be analyzed in most cases. The other caveat is very few companies can do all of these services in-house without having an anonymous subcontractor assist in the audits. I do not want this to be a shameless plug for J&L’s services.
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